2018 Regional Patronage – CHS

By Robert Bell

In November of 2017 CHS reported a net income of $127.9 million for the fiscal year ended August 31, 2017, compared to net income of 424.2 million reported in fiscal year 2016. Furthermore, CHS experienced a loss before income taxes of $54.8 million compared to before tax income reported of $419.9 million in fiscal year 2016. 2017 was a challenging year for many farmer-owned cooperatives, and the nation’s leader was no exception. Several of the contributing factors related to the poor earnings include losses incurred for intangible and fixed asset impairments, a Brazilian trading partner entering bankruptcy, a large bad debt loss related to a single producer and reduced energy margins.

In response to the poor earnings reported for 2017, CHS has announced that no qualified patronage will be issued in 2018. In recent years, many local cooperatives have relied on regional patronage income to bolster their bottom lines, with CHS providing a large portion of this. Not only do these allocations provide member cooperatives increased earnings, they also provide cash resources for income taxes, capital projects, expenses, inputs, etc. In 2016 CHS allocated patronage with forty percent paid in cash to members; depending on the amount of business done with CHS, this could be a substantial amount of cash resources that will not be available in 2018. However, CHS has announced they will issue non-qualified equity for 2017 patronage-based earnings which will be revolved at the discretion of the CHS Board of Directors.